Chair competence key as survey highlights inefficient meetings

Not according to research published by Aon Hewitt this month, which found that nearly 70 per cent of trustees surveyed said making decisions can take months from when the issue is first raised.

The paper coincides with a consultation from the Pensions Regulator on its recent ‘21st Century Trusteeship and Governance’ paper, which closes on September 9.

Among the changes mooted in the regulator’s report, released in July, was the introduction of qualifications for lay trustees, in particular those who act as the chair of a board.

You need a level of pensions knowledge – but you need chairing skills first and pensions knowledge second

Adrian Kennett, Dalriada

The 12 questions posed to respondents at Aon Hewitt’s 2015 conferences also revealed a widespread lack of specific, measurable, achievable, realistic and time-bound (Smart) business plans, something Aon said could show that boards are getting bogged down in detail to the detriment of their broader strategy.

“What it told us was that trustees just didn’t have enough time to do all the things that they had to do,” said Susan Hoare, principal at the firm.

She said progress in meetings can be hampered by prioritising discussions of individual members’ benefits or training, which should not be the focus of the main board.

This can mean key strategic decisions are revisited over several meetings, rather than dealt with in a timely fashion, although Hoare added that much depends on the quality of the chair’s guidance.

“If you have a good chair who can look at the agenda and see what needs to be the priority, and focus the right time and attention on those, then it can make a massive difference,” she said.

To delegate or not to delegate?

It’s perhaps unsurprising that, in order to boost the ability of boards to focus on timely strategic decision-making, Aon Hewitt recommended “implemented consulting”, where trustees delegate responsibilities to their consultants.

“They already do it in the administration space, and they don’t think for one second they’re going to go and calculate every member’s benefits. They just manage it with a stewardship report,” said Hoare.

But separating strategic overview from routine administration is not as simple as it seems, according to Adrian Kennett, director of Dalriada Trustees.

He said that many themes discussed by trustees fall into both categories, and also expressed concern that consultants have not yet developed a framework for sharing the trustee’s ultimate liability.

“I’m not sure how happy I’d be to leave some of the routine activity to someone who I haven’t got real visibility over exactly what they would be doing,” he said.

Trustee board inefficiencies such as delayed decisions or excessive focus on minutiae can be solved by effective chairing, without the need for administrative roles to be delegated, Kennett added.

But the vital nature of the chair’s role does not necessarily mean that they should be required to undertake training similar to that of a professional trustee, as the regulator’s work on the ‘21st century trustee’ has hinted at.

“The role of the chair of a meeting is to do just that: chair a meeting,” said Kennett. “To have those skills you need a level of pensions knowledge – but you need chairing skills first and pensions knowledge second.”

“It’s very important to look at the agenda in advance, to have the papers well circulated far enough in advance for trustees to have read them properly, and you need to be clear in the meeting [on] what the main objectives are,” said Andrew Parker, director at independent trustee company Law Debenture.

He recommended structuring meetings so that operational issues, like agreeing minutes, could be moved to the end of a meeting, and demanding topics could be addressed early on.

Sub-committee strife

Qualified or not, chairs of trustee boards may have to decide whether to delegate more complex issues such as investment strategy to sub-committees.

When trustees were asked if “decisions and actions sometimes touch more people than is really necessary (including trustees, employer and advisers), including people who don’t contribute much to the decision”, a large proportion of respondents agreed.

But this may not mean greater use of sub-committees is required, according to Parker. He warned of the dangers of trustees repeating previous discussions.

“That’s not a good use of time. It can typically happen where, for example, you have some work done in committee by a group of trustees and if you are not careful the whole debate can be rehashed again at the board meeting,” he said. “So the briefing and the paper arising out of the committee to the main trustee board is pretty critical.”